Inflation which is driven by higher minimum wage is known as

Question

BlackTom AI · Accepted Answer

Question focused on the type of inflation associated with policy actions that raise labor costs. 
Option 1: 'demand pull inflation' – This occurs when overall demand in the economy outpaces supply, driving up prices. It is not driven by increases in production costs like wages, so this choice does not fit the scenario. 
Option 2: 'cost push inflation' – This matches the described situation. When the minimum wage increases, firms face higher labor costs and may raise prices to maintain profit margins, causing inflation from higher costs rather than from demand. This is the classic cost-push mechanism. 
Option 3: 'quarterly inflation' – This is not a standard category of inflation; it suggests a time frame rather than a causal mechanism. It is an incorrect label for the phenomenon described. 
Option 4: 'cyclical inflation' – This would relate to inflation tied to the business cycle (e.g., expanding phases), not specifically to policy-induced wage changes. It does not capture the cost-origin aspect of the described inflation. 
Thus, the reasoning points toward cost push inflation as the correct categorization for inflation driven by higher minimum wage through increased production costs.

Inflation which is driven by higher minimum wage is known as Single choice

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Inflation which is driven by higher minimum wage is known as

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